Aetna Insider Sales: Health-Care Reform the Reason?

By Grace L. Williams

It looks like insiders at Aetna (AET) may be taking out insurance claims of their own in the form of profit-taking and cashing in shares.

On one day last week, three executives sold about 138,800 shares for roughly $6.4 million — William James Casazza, general counsel, followed up the next day and disposed of more shares when he exercised options and sold 42,400 shares for $1.9 million.

We are constantly mindful of the theory that the fiscal cliff is one of the factors fueling selling by insiders, but there’s another plausible theory about Aetna: Last week at its annual investors conference, Aetna’s CEO Mark Bertolini didn’t mince words when he said President Obama’s health care reform law could drive premiums to as much as twice their current levels — what he called “premium rate shock for 2014.”

Most important of these are: (1) the “minimum actuarial value” requirement that forces insurers to provide more financially generous coverage with fewer co-pays and deductibles; (2) the “community rating” provision that forces younger beneficiaries to pay far more for insurance in order to partially subsidize older beneficiaries; (3) the “guaranteed issue” provision that forces insurers to take all comers, even if they are already sick; and (4) the “essential health benefits” mandate that forces insurers to cover health-care services that many customers wouldn’t otherwise want to pay for.

While the impact of the reforms on the health-care sector remains to be seen, we will certainly be keeping an eye out for further selling at Aetna. The stock is up about 1% today and nearly 15% compared to last year.

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